2019-8-19
 
Yuexiu Property Enhances Financial Flexibility, Suggesting to raise Approximately HK $ 3.846 Billion by Shares
Release Date:2014-09-18 11:28:07
 

To assess the situation and actively optimize the land bank strategy, to seize opportunities for growth in the future:

1. Suggesting to raise approximately HK $ 3.846 billion through rights shares, at a subscription price of HK $ 1.25 per rights share, based on the benchmark of 33 shares allotted to 100 existing shares held by the qualified shareholders, to strengthen the company's financial strength, and enhance overall financial flexibility.

2. With the strategic plan of "based in Guangzhou and expanding nationwide", and under the expansion strategic direction of "returning to the first and second-tier cities", the Company has prepared strategic plan for investment opportunities expected to arise in the second half of this year or early next year, especially the opportunities in Guangzhou- the base of the company and the Pearl River Delta region. At the same time it closely monitors market opportunities, to ensure the balance between maintaining investment rating and sustainable development, and strive to create greater returns for shareholders, through land purchase or acquisition to supplement land reserve and expand scale at home and abroad.

To strengthen the capital base and providing greater financial flexibility to maintain a healthy and stable financial situation:

1. In the first half of 2014, the average cost of funds was only 5.2%, reducing by 0.4% compared with 2013.The net debt ratio remained at the healthy and reasonable level of 62.7%. As of June 30, 2014, the company's total cash was about RMB 9.753 billion yuan. In the first half of 2014, it financed RMB 8.6 billion, among which RMB 6 billion was refinancing, resulting in that the percentage of maturity loans next year in the total loans dropped from 35% last year to about 15%.

2. Moody and Fitch respectively gave an investment rating of "Baa3/stable" and "BBB-/stable" to the company.

3. The net proceeds of allocated shares is expected to further improve the company's net gearing ratio, cash position and availability of working capital, and further consolidate the strong financial position of the company, to prepare for growth in the future.

(September 3, 2014, from HONG KONG) - Yuexiu Property Company Limited ("Yuexiu Property" or the "Company") (Stock Code: 00123) announced the proposal of raising approximately HK $ 3.846 billion through rights shares("rights shares"), to enhance the company's financial strength and improve overall financial flexibility.

The Company proposed to raise approximately HK $ 3.846 billion through rights shares, at a subscription price of HK $ 1.25 per rights share, based on the benchmark of 33 shares allotted to 100 existing shares held by the qualified shareholders. The subscription price for the right shares is equal to the closing price of HK $ 1.67 per share on September 2, 2014, with about 25% discount. DBS Asia Capital Limited and BOCI Asia Limited are the underwriter for the plan of rights share.

In the first half of 2014, Yuexiu Property successfully achieved satisfactory and robust business performance. Despite the slowdown in growth in China's real estate market, the company had a total contract sales of about 11.939 billion yuan from January to July in 2014, which is a record high, up 17% by year, accounting for about 54% of annual sales target. The company is confident to complete the annual sales target of 22 billion yuan. At the same time, the company implemented the loan arrangement, with reasonable allocation of resources and optimization of financing structure. The average cost of financing in the first half of this year was 5.2%, down 0.4% compared with 5.6% in 2013.The net gearing ratio was 62.7%, maintaining a stable and healthy level. In the first half of 2014, the company financed RMB 8.6 billion, among which RMB 6 billion was refinancing, resulting in that the percentage of maturity loans next year in the total loans dropped from 35% last year to about 15%. The overall financial position is stable and ideal.

In the second half of 2014, there are signs of stability and gradual recovery in the domestic real estate market. The company considers that the measures by the government to relax the restriction order has been leading the market back to the "market-based" model. It is expected that in the second half of the year, the steady growth of China's GDP and continued urbanization will have a positive support for long-term development of China's real estate market. In the current market environment, Yuexiu Property actively deploys for investment opportunities that may arise in the second half of this year or early next year, especially in Guangzhou-the base of the company and the Pearl River Delta region. Therefore, the company strategically raised a total of approximately HK $ 3.846 billion through rights share, to strengthen its capital base and provide greater financial flexibility, and actively studies and seeking high-quality projects and land in the first-tier cities and developed second-tier cities, purchasing quality land reserves at reasonable price, to achieve healthy and sustainable sales growth.

As one of the three main industries of Yuexiu Holding Limited, Yuexiu Property got full support from its strong parent company-Yuexiu(enterprise) Holding Limited in the rights share. Yuexiu Holding Limited has made an irrevocable commitment to subscribing all the Rights Shares allotted at a total consideration of approximately HK $ 1.91 billion.

Mr. Zhang Zhaoxing, Chairman of the company, said: "Since 2009, with the strategic plan of 'based in Guangzhou and expanding nationwide', Yuexiu Property has been developing rapidly and steadily, and it is expected to successfully complete the contracted sales target of 22 billion yuan this year.”The company has been committed to rapidly expanding the scale and continuously improving management quality by maintaining a strong financial position. After a decade of rapid development in Chinese real estate market, the current adjustment period is necessary for market development, which can promote healthy and rational development of the real estate market. This is an opportunity to expand the development for real estate businesses with true strength and financial soundness. Therefore, the financing has not only consolidated the company's strong financial position, but also allows the company to better grasp market opportunities expected to arise in the second half of this year or early next year. The land purchase or acquisition to supplement land reserve and expand scale at home and abroad has provided a solid and adequate growth momentum for sales in the future, to ensure the balance between maintaining investment rating and sustainable development. Looking ahead, we will strive to achieve leapfrog development, and create greater returns for all shareholders. "